While both compensatory and punitive damages are monetary compensation awarded to plaintiffs in the aftermath of civil cases, they differ in a few major ways, including when they are awarded, how frequently, and what their intended purpose is. Below are some key differences between the two.
Compensatory damages are the most common form of damages awarded in civil court cases, that is, court cases involving a dispute between two or more private individuals, one or more individuals and one or more corporations, or two or more corporations. This type of damages can be secured based on evidence that a loss has occurred on the part of the plaintiff as a direct result of the unlawful actions of the defendant.
In addition, the defendant must be able to quantify their loss in some way in order to claim compensatory damages. That is not to say that the damages are only awarded with regards to clear monetary losses already suffered at the time of the claim. Instead, the plaintiff can be compensated for past losses, future losses and potential losses, depending on the situation – this is where the two different types of compensatory damages come into play.
The first type is special damages and the second is general damages.
Special damages are designed to cover for the most concrete aspects of the loss suffered. They can include awards covering:
- Medical bills
- Loss of income
- Loss of earning capacity
- Cost of insurance
- Cost of repairing damaged equipment
All of these loses, even if they happen in the future, such as in the case of earning capacity, can be easily calculated and presented in court.
General damages on the other hand cover the wider effects of an accident, to the extent that the damages can be proven to have been directly caused by the defendant’s unlawful behavior. They can include awards covering:
- Low quality of life
- Pain and suffering
- Inability to carry out daily tasks
- Loss of companionship
- Physical impairment
While general damages are a bit more fluid and difficult to calculate, it is still clear that they are intended to assist the plaintiff in returning to a general quality of life which the loss deprived them of. These damages are more likely to be awarded in personal injury cases over other types of civil disputes.
Punitive damages, also known as exemplary damages, are those intended as punishment for the defendant’s actions. In cases where they are applicable and the court orders them, they are awarded to a plaintiff over and above the compensatory damages already calculated. The reasoning for this is two-fold.
In the first instance, the damages are meant to make an example of the defendant, as a deterrent to the individual or entity whose actions have been found to be in breach of the law, as well as a deterrent to anyone who may consider engaging in the same or similar behaviour.
However, they also take into consideration the situation of the plaintiff. It is often the case that punitive damages are ordered where it is deemed that the compensatory damages do not do enough to cover the loss suffered by the plaintiff in the case, or that the defendant has profited from the loss in a way that ordinary damages simply do not account for. Courts will often consider just how malicious or grossly negligent the conduct of the defendant was, as well as whether punitive damages were ordered in previous similar cases, as a basis for deciding whether they should be ordered. It is thus difficult to provide listed examples of situations where punitive damages will always be awarded, as there is no clear rule. However, it can be stated with certainty that they are most likely to be awarded in personal injury cases alongside general compensatory damages, where the loss suffered by the defendant has been particularly gruesome.
Below is a handy table you can use as a memory guide for the difference between compensatory and punitive damages:
- Awarded in all private/civil cases
- Directly informed by losses suffered by the plaintiff and attributable to the defendant’s actions
- Intended to compensate the plaintiff for concrete losses or losses to their quality of life
- More likely to be awarded in personal injury cases
- Value is decided by the court based on precedent, and the most appropriate type of punishment
- Intended to punish the defendant and make an example of them